January 20, 2009 / 2:43 PM / in 11 years

Iran carmaker to raise output despite global auto woes

TEHRAN, Jan 20 (Reuters) - Iran Khodro, the Middle East’s biggest carmaker, said on Tuesday it aims to boost output and exports in coming years despite a global downturn for the sector and Western sanctions on the country that have pushed up costs.

Manouchehr Manteghi, chief executive and president of the partly-state-owned Iranian company, also said it wants to reduce its dependence on foreign-made components and that it is ready to be privatised if the government so decided.

He told reporters Iran Khodro was profitable but did not give figures. He also played down the impact of sanctions and the world financial crisis.

“Despite the recession in the global car industry we are facing a very resilient and strong market domestically,” Hamidreza Taghavinejad, deputy president for strategy and planning, said at the same news conference.

But an industry consultant said Iran Khodro, which like other Iranian vehicle manufacturers enjoys high tariff protection, needed to improve productivity and had lost market share in Iran to domestic rival Saipa.

“(For) three to four years, Saipa has had much better performance than Iran Khodro,” said the consultant, who declined to be named.

Manteghi said Iran Khodro aims to raise efficiency without changing its workforce and plans to increase production to 1 million cars and pick-up trucks by 2011-12 from 545,000 units in 2007-08.

It has partnerships with global carmakers, such as a joint venture with France’s Renault (RENA.PA) to make the no-frills Logan, sold in Iran as the Tondar-90, and also Peugeot’s PEUL.PA 206 and 405 models.

“CLOSED MARKET”

France is among the Western countries that have pushed for tougher punitive measures on Iran over nuclear work they suspect is aimed at making bombs, a charge Tehran denies.

Manteghi said imports for making Peugeot cars had already come down sharply but did not spell out whether international politics played a role in company thinking.

“We are trying to cut our strategic dependence on foreign manufacturers, particularly French (manufacturers),” he said at the company headquarters on the outskirts of Tehran.

Manteghi said increased self-sufficiency required state support and said Iranian banks were reducing lending to the industry, whereas struggling carmakers elsewhere in the world are receiving hefty financial support from governments.

Iran Khodro was in talks with Japanese companies about possible cooperation, Manteghi said, without naming them.

Taghavinejad said its export earnings reached $542 million in 2007-08, much of it to other Islamic countries, and that it aims to be the Muslim world’s leading producer.

Iran was ranked the 16th biggest car producer in 2006.

The car industry consultant said it was possible for Iran Khodro to raise output to targeted levels because the company is helped by tariffs, some of them around 100 percent, and energy subsidies.

“In a closed market you can do as you want,” he said, adding it was selling cars to countries Tehran had close ties with, such as Syria and Venezuela.

Analysts said U.S. and U.N. sanctions imposed on Iran over its nuclear programme are making it more difficult to secure trade finance and deterring foreign investors.

Manteghi acknowledged that such measures had increased costs but said they did not hinder other aspects of the business, such as access to technology. Iran Khodro’s “vulnerability to sanctions is extremely low,” he said. (Editing by Sharon Lindores)

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